Short-term vacation home rules implementation causes rent in B.C. communities to fall: report
Apartment rents in several urban neighbourhoods in British Columbia declined noticeably after city governments in those areas prohibited people from renting out entire principal residences as short-term vacation homes, a new report has found.
The rents as of October, 2023, were lower by $110 a month compared with the previous year in 52 key neighbourhoods – down to $1,821 from $1,931 – according to a statistical analysis by McGill University associate professor David Wachsmuth and researcher Cloé St.-Hilaire. In Vancouver, it is $147 a month less on average.
The report is set to be released Wednesday, a month before a provincial election in which the governing NDP’s own new policy restricting short-term rentals (STR) is a flashpoint. In the analysis, which says B.C.’s policy is the largest-scale initiative of its kind in Canada, Dr. Wachsmuth estimates that renters will end up paying $600-million a year less once the province’s regulations fully kick in.
The new provincial rules took effect in May in all cities of 10,000 people or more in the province unless they were deemed resort communities. They limit owners to renting out space in their principal residence only if the owner is away for a short period of time or is renting out a room while continuing to live there.
Vancouver has had such restrictions in place for several years. But the province-wide regulations have been bitterly opposed by existing vacation-rental owners, and a group of them is currently suing the government. And the provincial Conservatives, which has emerged as the NDP’s main opponent in next month’s election, has promised to roll back all the housing changes introduced in recent years.
However, Dr. Wachsmuth suggests that B.C. renters will pay the consequences if any reversal takes place. STRs are blamed for increased rents because they often remove long-term units from the market, intensifying the shortage that already exists.
“This implies that, if the province’s STR rules were to be repealed after 2024, within two years B.C. renter households in these cities would have paid an extra $1-billion in rent,” he wrote in the analysis.
The report is a special paper that Dr. Wachsmuth has produced for Fairbnb, a now-independent lobby group, and its details are part of a study that is currently being reviewed for publication in an academic journal. The group, originally funded by hotel-worker unions, publicizes the negative effects of vacation rentals on the housing market.
Dr. Wachsmuth’s work related to B.C. has been criticized by opponents, who note that it was paid for by the BC Hotel Association and that it doesn’t factor in the many reasons why rents might be going down in a particular area.
In the past year, rents in various parts of Metro Vancouver have stayed flat or gone down as the demand for rentals appears to have eased, in the wake of a big drop in the number of international students coming to Canada to study and an aggressive effort in B.C. to build new apartments for both student and regular renters.
But Dr. Wachsmuth said the foundation for the Fairbnb paper is the peer-reviewed and comprehensive statistical analysis he has done as part of his academic research.
And, he said in an interview from Montreal, the research looks at such a wide range of cities, all with multiple factors affecting their housing market, that the consistent trend of rents going down after principal-residence restrictions are put in shows that the other factors can’t account for the changes.
Dr. Wachsmuth’s work for Fairbnb also indicated that vacation-rental listings for entire homes that were previously rented out frequently are already showing a noticeable drop in B.C., even though the regulations have only been in place since May. (Those numbers are not part of his academic study.)
“In jurisdictions subject to the restriction, FREH (frequently rented entire home) listings dropped substantially between April and May, 2024, and have continued to decline,” the study says.
“In total, 15.8 per cent of previously detected FREH listings in these areas had disappeared from Airbnb by July 2024. The drop was most pronounced in jurisdictions which had previously adopted local principal residence restrictions.”
Dr. Wachsmuth used Canada Mortgage and Housing Corporation data on rents, which is produced once a year. It details rents for different sizes of apartments in hundreds of individual neighbourhoods across Canada. He looked at the difference in rents at the beginning of 2023 compared with the end of the year in neighbourhoods that have both kinds of cities – ones that had initiated vacation-rental restrictions, and others that had not.
This article was first reported by The Globe and Mail
